What is the KDJ index and how should it be analyzed?

For the technical school, there are many indicators that can provide operational reference. What is the KDJ index and how should it be analyzed?

Speaking of the random index (KD), new investors will not be unfamiliar. It is based on the relative position of the current stock price in the recent stock price distribution to predict the possible trend reversal, that is, we often say overbought and oversold.
There is such a judgment standard: when d > 80, it is overbought; when d < 20, it is oversold; when J > 100, it is overbought; when J < 10, it is oversold. Or intuitively, when the K index breaks through the D index upward, it is the buyer's signal; when the K index goes down through the D index, it is the selling signal. There are many restrictions on the use of KDJ index, which is not suitable for small cap stocks. The cross of K index and D index must occur above 70 and below 30, etc. However, using KDJ index to analyze the market, or hot stocks has a high accuracy, which is the root of our use of KDJ index.
Generally speaking, the KDJ index has the following three principles:
1. If D is lower than 10 ~ 15 level is buyer signal, if it is higher than 80, it is selling time.
2. When the value of K is greater than the value of D, it shows that the current trend is upward. Therefore, when k line crosses line D upward, it is a buy signal.
3. When the value of D is greater than the value of K, the current trend is downward. Therefore, in the graph, when line k crosses line D downward, it is a sell signal.
It is worth noting that the above-mentioned principles are of low reliability and often lead to deception (especially when analyzing the KDJ index based on the daily unit). In order to achieve better results, it is necessary to analyze the trend, trading volume and morphology.
From the history of the development of China's stock market, the truly beautiful big bull stocks generally have such generality: when the stock price is pushed upward from the bottom with a small positive line, the KDJ index also enters the high position. Before the major force rises sharply, it often presses down with a big Yin line. This is the case with KDJ index. At this time, the KDJ index forms 80 The dead fork above the high position is extremely frightening, and then the main force continues to advance to the high position again with the small Yang line and the middle Yang line. At this time, the KDJ index will form the so-called high gold meaning at 70 or 80 Yin. With the rise of stock price, there will be more than 80 passivation, that is, the horizontal development of indicators. If KDJ can maintain this situation, the stock price will continue to rise. This law is very important, and it is a part of the technique of riding black horse, which is worth studying carefully.
In fact, using KDJ index, the most important thing is to accurately grasp its passivation phenomenon. Passivation phenomenon refers to that KDJ index repeatedly forms golden fork and dead fork around 80 or 20, and the general trend develops horizontally, which looks terrible on the surface. If the index is near 80, it looks very high. In fact, this also shows that the bull power is super strong, the stock price is easy to form a unilateral rise. The same thing is true around 20. It seems that the index is very low and seems to be very safe. However, from another perspective, it also shows that the short side is extremely strong and the stock price is easy to form a sustained unilateral decline. At this time, we should pay attention to the use of trend analysis, volume analysis and trend indicators. If you only rely on the low KDJ index to buy stocks, you will definitely suffer losses.
Of course, it is quite difficult for new investors to focus on the three index lines of K, D and j at the same time. In fact, there is no need to be so troublesome. Using J index alone can find the bottom and top of a large cap stock. If the j index continues to go down to 0 or below (negative), combined with the important average line, we can observe the bottom of the market or individual stocks. New investors can If the j index goes up continuously to 100 or
Above, the market will reverse at any time, this is the top of the market or individual stocks, new investors can cash out of the game, wait and see before they enter the market. This skill of quickly finding the bottom and top through the j index is very helpful for the new investors who are newly involved in the stock market. It is easy to learn and more accurate. It is helpful to help new investors find out the buying point and selling point, so as to quickly arbitrage.
        

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